Which statement best contrasts an active fund with an index fund?

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Active funds aim to beat the market through research and stock selection, while an index fund is designed to track a specific benchmark by passive replication. The statement that best contrasts them is that an active fund seeks to outperform the benchmark, whereas an index fund aims to mirror the benchmark via a passive approach. This reflects the core difference in management style, including fee and risk implications: active funds take on more risk in hopes of higher returns and typically charge higher fees, while index funds seek predictable tracking of the index with lower costs. The other options aren’t correct because an index fund is not about outperforming the benchmark, it isn’t limited to government bonds, and active funds do change their holdings over time.